World Steel Association cuts 2014 global steel demand growth forecast to 2%
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Global apparent steel (finished steel products) demand is expected to increase 2% in 2014 and 2015, mainly driven by demand in India, Africa and the Middle East, while demand in other regions is expected to remain subdued due to geopolitical factors and economic slowdown, according to the World Steel Association (Worldsteel). Global finished steel use in 2013 stood at around 1.48 billion tonnes, up about 3.8% from the previous year, but demand is likely to grow by 2% this year to 1.56 billion tonnes and again at the same level in 2015 to 1.59 billion tonnes. In April 2014, Worldsteel had forecast a growth of 3.1% for finished steel products this year, but economic deceleration in China and in other developing countries have led to a downward revision. Hans Jürgen Kerkhoff, Chairman, Worldsteel Economics Committee, said “The positive momentum in global steel demand seen in the second half of 2013 abated in 2014 with weaker than expected performance in the emerging and developing economies.”
Demand in China has been the major driving force for world steel consumption in the last decade. In 2003, China’s steel consumption stood at around 240 million tonnes (about 27.3% of total global steel consumption), but China’s share soared to over 700 million tonnes (or about 47.3% of total global steel consumption) in 2013. However, there are signs that steel demand is moderating in China. Demand for steel is also down in South America and the CIS countries due to declining commodity prices and geopolitical tensions, says Worldsteel. It adds that while demand is improving in developed economies it is not enough to offset the slowdown in the emerging economies.
However, steel demand in India, which is the world’s fourth largest producer and 15th largest exporter of steel, is likely to grow sharply next year. According to Worldsteel, India’s steel demand is expected to grow by 3.4% to 76.2 million tonnes in 2014, up from a growth of 1.8% in 2013. “In 2015 structural reforms and improving confidence will support a further 6% growth in steel demand,” Worldsteel said. This is reflected in higher production in India. In August 2014, India’s crude steel production stood at around seven million tonnes, up about 5.2% from August 2013, according to Worldsteel. Under its policy to increase the share of manufacturing in GDP from 16% to 25%, the Indian government is targeting steel production of 300 million tonnes per year by 2025, up almost four times from the current levels of around 81 million tonnes per year. The government is expected to announce a new steel policy that will address several issues the steel industry in India is grappling with including environmental, land acquisition and logistics problems. Industry representatives say that boosting steel production in India will reduce prices and help improve per capita steel consumption in India which is at a low of 57.5 kilograms.
This article was published on October 7, 2014.